Lawmakers: FAFSA should use 'prior-prior year' data

On Friday, several dozen congressional lawmakers urged the President to allow families to apply for Federal Financial Aid using the tax information already filed with IRS during the student's senior year of high school.  Translation: the tax year 2 years prior to the student enrolling in college.

Lawmakers stated in their letter to the President, "By letting students find out what federal aid they are eligible for before college application deadlines, it will help them make more informed decisions about where to apply and what they can afford..." Yes, Amen!  That magic word, AFFORDABILITY.  Letting students know what aid they are eligible for so they can make more informed decisions, this is exactly what My College Authority has been doing for families for 10 years.

But, collecting income and asset data from families two years prior to college is not the answer to making college more affordable. The answer is in making federal financial aid eligibility more transparent, state financial aid eligible more transparent, and understanding how college's use their own financial aid monies.

Explain to families that their federal aid eligibility is determined by their Expected Family Contribution (EFC).  Explain to families that their EFC is primarily calculated based on parent income, parent assets, student income, student assets. Explain to families that if their household income is less than $24,000 per year their EFC is zero.  And, finally, explain to families what federal aid is and how it's awarded.

• Federal Pell Grants - Eligibility and grant amount based on the EFC. Eligibility calculation is maximum PELL grant minus EFC equals student's amount.  $5,775 - $0 = $5,775 PELL Grant compared to $5,775 - $5,775 = $0 PELL Grant.
  
• Subsidized Stafford Loan - Students must show financial need to be eligible. Eligibility calculation is college's cost of attendance minus EFC equals student need.  Maximum Subsidized Stafford Loan is $5,550 for first year students and a maximum of $31,000 per student for life.
• SEO Grant - Students must be eligible for the PELL Grant first to be eligible for the SEO Grant.  Colleges are allocated a lump sum each year and will determine grant amounts at their own discretion.
  
• Federal Work Study - Students must show financial need to be eligible. Eligibility calculation is college's cost of attendance minus EFC equals student need.  Federal Work Study funds are allocated as lump sum each year to each college who then determine individual student amounts at their own discretion.
• Federal Perkins Loan - Students must show financial need to be eligible. Eligibility calculation is college's cost of attendance minus EFC equals student need.  Federal Perkins Loan funds are allocated as a lump sum each year to each college who then may determine work study amounts at their own discretion.

States may then have their own financial aid monies available to students who meet eligibility requirements.  For example, in the state of Oregon, Oregon high school graduates who are PELL Grant eligible receive an additional $2,100 Oregon Opportunity Grant. If a student is not PELL Grant eligible, they are not eligible for the Oregon grant.

The next best opportunities for financial aid, after federal and state monies, will come from the college's own pockets. This is institutional financial aid awarded by each individual college to the students they want to give it to.  They may give it because a student "needs" it, for merit, for athletics, and talent.  They may have raised their prices enough to come back and provide a feel-good discount across the board much like shopping at Kohl's. It's the college's own money and they will give it to the students they want to give it to. 

If you want to know what federal aid your student is eligible for before college application deadlines, want to help them make more informed decisions about where to apply and what they can afford, and have more time to consider and apply to multiple colleges, attend one of our college planning workshops or call today for a free 15-minute consult. 

Creating opportunities, My College Authority, Inc.